This tax credit is for small business owners, defined as having 100 or fewer full-time W-2 employees in 2020, and fewer than 500 W-2 full-time employees in 2021. Congress passed legislation in March 2020 to launch the program to provide financial relief to businesses navigating through the effects of COVID-19. Congress has modified or extended the program several times, which now applies to a total of up to six quarters for many businesses (2nd – 4th Quarters of 2020, and 1st – 3rd Quarters of 2021).
Business owners might be eligible for a maximum credit of up to $26,000 per employee, if they qualify for the credit in every quarter that Congress authorized. This is a refundable tax credit, meaning if you already paid the tax on your original returns, you will receive a cash refund.
Note: if IRS issues you an ERC tax credit refund, you will need to amend your original business tax returns to reflect the tax impact of that ERC credit amount.
